7 Things to Think About Before Buying Crypto in 2023

Since its dawn, the crypto market has been growing continuously at a rapid pace and is nowhere near halting. Although last year was rough for the crypto market, from BTC dropping below $20k to FTX’s bankruptcy, the market has been noticing a comeback, with more crypto projects adding to the list every single day. Today, around 19,000 cryptocurrencies exist, despite the biggest players like Bitocin, Ethereum, Solana, and even meme coins like Dogecoin and Shiba Inu.

Also read: 11 Ways to Earn Free Crypto

As a beginner in the crypto space, it has thus become crucial to conduct due diligence before investing in one. In this article, we will delve into seven crucial factors to check before buying a crypto in 2023.

1. Check Out the Website of Project

To judge the legitimacy of the crypto you are willing to invest in, the first step would be to check the project’s website. If a particular project is serious about their business, they are most likely to have an informative, engaging, and updated website.

Here is a list of things you can check out when determining whether a crypto is worth investing in or not:

• The website is up-to-date.
• There are no spelling errors and the UI is clean.
• Clearly discloses the team members behind the projects as well as the partnerships.
• Openly defines the objective of the project.
• Provides a whitepaper for the users and visitors.

2. Go Through the White Paper

When deciding whether to put money in a crypto or not, one of the most important things you need to check is the white paper, since it acts like the backbone of the project’s proposal. A white paper is an authoritative document that offers an outline of the project’s objectives, details, strategies, and goals.

The document also gives a fair idea of the roadmap of the coin that most veteran investors go through before investing in a crypto to have a clear notion of where the crypto is likely to be headed.

You will also get to know about the coin’s tokenomics, which includes details regarding the token’s distribution among the investors and the supply limits. Here you can also get information regarding the minting of new tokens, which is a crucial part of a cryptocurrency’s ecosystem. This will help you get a clear picture of the project and whether it is a legit investment to make.

3. Take a Look at Their Social Media Channels

Visit the social media accounts of the cryptocurrency community to get a thorough understanding of the project you are willing to invest in. The majority of bitcoin projects will have channels they control on various social media channels like Twitter, Reddit, or Discord.

Keep an eye on how many followers they have and how the comment sections are being used. Check to see if the community moderators are responding to inquiries, sharing news, and engaging in conversations. This way, you will recognise a social media crypto scam easily.

Scrutinising a general search across social media can be useful in determining how authentic the project is.

4. Analyse the Market Metrics of the Coin

Successful and veteran investors analyse three critical market metrics: Market capitalisation, trading volume, and supply metrics. As a general rule of thumb, investing in cryptocurrencies with a large market cap is safer, but this isn’t always the case. 

Some cryptocurrencies with high market caps are still high-risk, so determining the value potential by market cap alone isn’t advised. There are also many more recent initiatives that have tremendous promise and alliances supporting them; They just need more time or exposure to cross that threshold.

Similarly, you must also look at the trading volume, which indicates how much the coin has been traded within a particular time frame. A cryptocurrency with a high volume implies more liquidity and stability in price.

Supply metrics are another factor to keep in mind, as they denote how many coins are in supply, whether being traded or held in a wallet.

5. Verify the Team and Partnerships

There are many instances where the team members of a particular project were involved in other well-known coin launches. This increases the trust and reliability of the given coin. A team with a prior history of projects that are already thriving in the community is a good sign to consider.

6. Check if the Crypto Has a Utility

It’s true that the crypto market has been growing phenomenally for the past few years, but along with that, the differences among the currencies are also increasing. You need to keep in mind that not every cryptocurrency has the same purpose. It is always a better idea to go for those coins that offer utility in the blockchain space.

7. Go Through the Price History of the Coin

Last but not least, make sure to study the price history of the coin you are willing to invest in. The crypto market is well-known for its volatility, so it’s quite common to notice volatility in the prices. However, you must notice a gradual surge in the price over the years, which represents the potential of the coin to offer you profit.

Conclusion

Getting into the crypto market for the first time can seem overwhelming at first. These points mentioned above will give you a clear idea of where to start, and how to invest in cryptocurrencies with the minimum risk involved.

Frequently Asked Questions

Is Buying Cryptocurrency Legal?

This depends on the location in which you are trying to invest in crypto because regulations differ from one place to another. For example, buying cryptocurrency is legal in the United States but not in China. 

Is It Safe to Invest in the Crypto Market as a Beginner?

Transactions done with cryptocurrencies are encrypted, anonymous, and safe. Since there is no middleman, no one will be able to spy on your financial activities. Beginners do not have to worry about safety issues.

How Do I Buy Cryptocurrencies Safely?

You can buy cryptocurrencies through a broker or exchange. Simply create an account, deposit funds, choose the preferred pair, and place your order. Next, choose a preferred method for storing the coins you have bought.